Iranian banks to start operations in India even as US ponders fresh sanctions

Iran's Foreign Minister Mohammad Javad Zarif (L) and his Indian counterpart Sushma Swaraj seen in this pictureAdnan Abidi/Reuters file photo

Major Iranian banks are to start operations in India as Tehran is crawling back from economic clampdown. The move is intended to boost relations between Tehran and New Delhi following the easing of US-led western sanctions against Iran.

Iran's leading financial entities such as Pasargan Bank and Parsian Bank of Iran are to set up their offices in New Delhi and Mumbai as part of the latest strategic cooperation agreement. A string of other deals has also been struck with the Iranian delegation's visit, led by Finance Minister Ali Tayebnia, to India to meet Delhi's External Affairs Minister Sushma Swaraj. This is the first time high-profile delegates from the two countries are meeting since Iran signed a nuclear deal with world powers in July 2015.

"A major beneficiary of normalisation of banking channels between two sides will be India which has just begun settling more than $6.5bn [£4.38bn] energy-related pending payment, with Iran. Currently both Pasargan and Parsian conduct their transactions through the UCO bank of India," said K L Malhotra, convenor of the recently-launched body Indo-Iran Economic Cooperation Council.

Some Indian banks would also venture into Iran as part of the accord. Both the parties are also exploring engagement in other areas such as ports, infrastructure, energy and railways to enhance collaboration.

Fresh US sanctions loom large

Meanwhile, the US is also said to be drafting fresh sanctions against Iran over its ballistic missile programme, which facilitated a major missile launch recently. Sources familiar with the matter told the Wall Street Journal that Iran-based international firms and individuals could be targeted.

"We've been looking for some time‎ at options for additional actions related to Iran's ballistic missile program based on our continued concerns about its activities, including the October 10th launch. We are considering various aspects related to additional designations, as well as evolving diplomatic work that is consistent with our national security interests," a White House official was cited as saying. Iranian officials have been warning against any such move and insisting that it would be a violation of the nuclear deal.